Do you have to pay taxes on your paypal income?

Paypal can be used as a means of selling property. When you sell property, you may owe tax. You pay the tax by filing a tax return and remitting the balance due.

If you are selling inventory of items you acquired for resale, you are self-employed, running an online sales operation. Report your revenues and expenses on your tax return. If you net $400 or more from your sales operation, you are required to file a tax return. If you are otherwise required to file a tax return, all of your net income from your sales is reported on your tax return, no matter how little.

If you are selling items that you bought for your own personal use, and you sell the item for less than your cost, you do not report this transaction on your tax return, and you have no loss to deduct. If you sell an item for more than your cost, the gain on the sale is a capital gain that you report on your tax return.

There are other scenarios but the above covers almost all situations. The government knows how much you "make" when you file your tax return. The government also requires Paypal to report transactions to them when the number of transactions and the total amount exceeds threshholds.

Rule of thumb, you report your income accurately even if you don't think the IRS knows about it.

Paypal is required to issue you a 1099-K (not -C as someone posted) if you have large amounts of transactions. This is because Congress is convinced people were not reporting income.

If you get a 1099-K, you must file to reconcile the money, even if it is not taxable.

As far as "sales" what are you selling?

Selling personal items at a loss is not taxable.

Selling personal items at a gain is taxable (schedule D).

Selling items you bought for resale (aka inventory) typically goes on schedule C. if your NET income is more than $400, you can owe.

Yes, if its from a business, for example selling stuff on ebay, then you have to pay tax. if you are only selling a few things as a hobby then you don't have to pay tax.

In the USA use form 1040-C to file business tax.

The government can always find out about your income if they want to. however, unless you've given Paypal your SS# they aren't going to be reporting your income to the IRS. However, your Paypal account is linked to a checking account and thats how the gov. will find it if they want to.

read at pay pal, but, if they need u to pay taxes, they will (paypal) will send a document you include on your 1040 form and it will figure in and tell u how much to pay. paypals website should show the limits of the income that trigger a form to come to you, you should recieve it by jan 31 as all other forms that go with 1040s such as from employers etc.

It is self employment income and you must report it whether you receive a 1099misc or not. If it is your only income then there is a minimum of $400 before reporting, IF you have other income then you report all your self employment.

Pay Pal and the banks automatically notify the authorities if "trading type activity" is noted on the account. You are required to have a business account for business and PP and the banks are not going to defy the authorities. We are actively hunting people who use these accounts.

Theoretically, yes. But unless you're actually operating a business, I wouldn't worry about it. The IRS has no way of knowing whether you're making a profit on whatever you're selling.